Native advertising is a type of disguised advertising, mostly online, that matches the form and function of the platform upon which it appears. In many cases, it manifests as either an article or video, produced by an advertiser with the specific intent to promote a product, while matching the form and style which would otherwise be seen in the work of the platform's editorial staff. The word "native" refers to this coherence of the content with the other media that appears on the platform.

Product placement (embedded marketing) is a precursor to native advertising. Instead of embedded marketing's technique of placing the product within the content, in native marketing the product and content are merged. Because of this merger of advertising and content, the legal status of native advertising is uncertain,[1] and the Federal Trade Commission held a workshop on advertorials and other disguised advertising in 2013.[2][3]

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Despite the ambiguity surrounding native advertising's invention, many experts do consider the Hallmark Hall of Fame, a series which first aired in 1951 and still runs today, as among the earliest instances of the technique. According to Lin Grensing-Pophal, "The award-winning series is arguably one of the earliest examples of 'native' advertising—advertising that is secondary to the message being delivered, but impactful through its association with valued content."[4]

Contemporary formats for native advertising now include promoted videos, images, articles, commentary, music, and other various forms of media. A majority of these methods for delivering the native strategy have been relegated to an online presence, where it is most commonly employed as publisher-produced brand content, a similar concept to the traditional advertorial. Alternative examples of modern technique include search advertising, when ads appear alongside search results that qualify as native to the search experience. Popular examples include, Twitter's promoted Tweets, Facebook's promoted stories, and Tumblr's promoted posts. The most traditionally influenced form of native marketing manifests as the placement of sponsor-funded content alongside editorial content,[5] or showing "other content you might be interested in" which is sponsored by a marketer alongside editorial recommendations.[6]

Most recently, controversy has arisen as to whether Content marketing is a form of native marketing, or if they are inherently separate ideologies and styles; with native market strategists claiming that they utilize content marketing techniques, and some content market strategists claiming to not be a form of native marketing.

As it is the nature of disguised advertising to blend with their surrounding, a clear disclosure was deemed necessary when employing native marketing strategy in order to protect the consumer from being deceived, and to assist audiences in distinguishing between sponsored and regular content. According to Federal Trade Commission, means of disclosure include visual cues, labels, and other techniques.[7] The most common practices of these are recognizable by understated labels, such as “Advertisement”, “Ad”, “Promoted”, “Sponsored”, “Featured Partner”, or “Suggested Post” in subtitles, corners, or the bottoms of ads. A widespread tendency in such measures is to mention the brand name of the sponsor, as in “Promoted by [brand]”, “Sponsored by [brand]”, or “Presented by [brand]”.[8] These can vary drastically due to the publisher's choice of disclosure language (i.e. wording used to identify native advertising placement).

In 2009, the Federal Trade Commission released their Endorsement Guideline specifically to increase consumer awareness of endorsements and testimonials in advertising given the rise in popularity of social media and blogging.[9]

The American Society of Magazine Editors (ASME) released updated guidelines in 2015 reaffirming the need of publishers to distinguish editorial and advertising content. The ASME approach recommends both labels to disclose commercial sponsorship and in-content visual evidence to help the user distinguish native advertising from editorial.[10]

A study published by University of California researchers found that even labeled native advertising deceived about a quarter of survey research subjects. In the study, 27% of respondents thought that journalists or editors wrote an advertorial for diet pills, despite the presence of the "Sponsored Content" label. Because the Federal Trade Commission can bring cases concerning practices that mislead a substantial minority of consumers, the authors conclude that many native advertising campaigns are probably deceptive under federal law. The authors also explain two theories of why native advertising is deceptive. First, schema theory suggests that advertorials mislead by causing consumers not to trigger their innate skepticism to advertising. Second, advertorials also cause source-based misleadingness problems by imbuing advertising material with the authority normally assigned to editorial content.[11]

The Interactive Advertising Bureau (IAB), the primary organization responsible for developing ad industry standards and conducting business research, published a report in 2013[8] detailing six different categories for differentiating types of native advertisements.

In-Feed Ad Units: As the name denotes, In-Feed ads are units located within the website’s normal content feed, meaning they appear as if the content may have been written by or in partnership with the publisher’s team to match the surrounding stories. A category that rose to popularity through sites like Upworthy and Buzzfeed's sponsored articles due to its effectiveness, In-Feed has also been the source of controversy for native marketing, as it is here the distinction between native and content marketing is typically asserted.

Search Ads: Appearing in the list of search results, these are generally found above or below the organic search results or in favorable position, having been sold to advertisers with a guarantee for optimal placement on the search engine page. They usually possess an identical appearance as other results on the page with the exception of disclosure aspects.

Recommendation Widgets: Although these ads are part of the content of the site, these do not tend to appear in like manner to the content of the editorial feed. Typically delivered through a widget, recommendation ads are generally recognizable by words which imply external reference, suggestions, and tangentially related topics. "You might also like"; "You might like"; “Elsewhere from around the web"; "From around the web"; "You may have missed", or "Recommended for you" typically characterize these units.

Promoted Listings: Usually featured on websites that are not content based, such as e-commerce sites, promoted listings are presented in identical fashion with the products or services offered on the given site. Similarly justified as search ads, sponsored products are considered native to the experience in much the same way as search ads.

In-Ad (IAB Standard): An In-Ad fits in a standard IAB container found outside the feed, containing "...contextually relevant content within the ad, links to an offsite page, has been sold with a guaranteed placement, and is measured on brand metrics such as interaction and brand lift."

Custom / Can't be Contained: This category is left for the odd ends and ads that do not conform to any of the other content categories.

Native advertising platforms are classified into two categories, commonly referred to as "open" and "closed" platforms, but hybrid options are also utilized with some frequency.[12][13][14]

Closed platforms are formats created by brands for the purpose of promoting their own content intrinsically on their websites. Advertisements seen on these platforms will not be seen on others, as these ad types are generated for its sole use, and structured around exhibiting ad units within the confines of the website's specific agendas. Namely, advertisements distributed on closed platforms originate from the platform's brand itself. Popular examples include Promoted Tweets on Twitter, Sponsored Stories on Facebook, and TrueView Video Ads on YouTube.

Open platforms are defined by the promotion of the same piece of branded content across multiple platforms ubiquitously, but through some variation of native ad formats. Unlike closed platforms, the content itself lives outside any given website that it appears on, and is usually distributed across multiple sites by a third party company, meaning that the advertisements appearing on open platforms namely are placed there by an advertiser.

Hybrid platforms allow the content publishing platforms to install a private marketplace where advertisers have the option to bid on the inventory of ad space either through direct sales or programmatic auction through what is known as Real-Time Bidding (RTB). Therefore, advertisements distributed on hybrid platforms are placed there by the platform itself, the space having been sold to an open platform advertiser.